Economic growth

GDP real growth rates, 19901998 and 19902006, in selectedcountries.

Rate of change of Gross domestic product, world and OECD,since 1961.

Economic growth is the increase in the market valueof the goods and services produced by an economy overtime. It is conventionally measured as the percent rate ofincrease in real gross domestic product, or real GDP.[1]Of more importance is the growth of the ratio of GDPto population (GDP per capita, which is also calledper capita income). An increase in growth caused bymore ecient use of inputs is referred to as intensivegrowth. GDP growth caused only by increases in inputssuch as capital, population or territory is called extensivegrowth.[2]

In economics, economic growth or economic growththeory typically refers to growth of potential output,i.e., production at "full employment". As an area ofstudy, economic growth is generally distinguished fromdevelopment economics. The former is primarily the studyof how countries can advance their economies. The latteris the study of the economic development process partic-ularly in low-income countries.Growth is usually calculated in real terms i.e., ination-

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Economic growth caused the production-possibility frontier toshift outward.

adjusted terms to eliminate the distorting eect ofination on the price of goods produced. Measurementof economic growth uses national income accounting.[3]Since economic growth is measured as the annual per-cent change of gross domestic product (GDP), it has allthe advantages and drawbacks of that measure.

1 Measuring economic growthMain article: Gross domestic product

Economic growth is generally calculated from data onGDP and population provided by countries statisticalagencies, although independent scholarly estimates arealso available.

2 Importance of long-run growthOver long periods of time, even small rates of growth,such as a 2% annual increase, have large eects. For ex-ample, the United Kingdom experienced a 1.97% aver-age annual increase in its ination-adjusted GDP between1830 and 2008.[4] In 1830, the GDP was 41,373 millionpounds. It grew to 1,330,088 million pounds by 2008. A

1

2 3 FACTORS AFFECTING ECONOMIC GROWTH

growth rate that averaged 1.97% over 178 years resultedin a 32-fold increase in GDP by 2008.The large impact of a relatively small growth rate over along period of time is due to the power of exponentialgrowth. The rule of 72, a mathematical result, states thatif something grows at the rate of x% per year, then itslevel will double every 72/x years. For example, a growthrate of 2.5% per annum leads to a doubling of the GDPwithin 28.8 years, whilst a growth rate of 8% per yearleads to a doubling of GDP within 9 years. Thus, a smalldierence in economic growth rates between countriescan result in very dierent standards of living for theirpopulations if this small dierence continues for manyyears.

2.1 Quality of life

Happiness has been shown to increase with a higher GDPper capita, at least up to a level of $15,000 per person.[5]Economic growth has the indirect potential to alleviatepoverty, as a result of a simultaneous increase in employ-ment opportunities and increased labour productivity.[6]A study by researchers at the Overseas Development In-stitute (ODI) of 24 countries that experienced growthfound that in 18 cases, poverty was alleviated.[6] How-ever, employment is no guarantee of escaping poverty;the International Labour Organization (ILO) estimatesthat as many as 40% of workers are poor, not earningenough to keep their families above the $2 a day povertyline.[6] For instance, in India most of the chronically poorare wage earners in formal employment, because theirjobs are insecure and low paid and oer no chance toaccumulate wealth to avoid risks; other countries foundbigger benets from focusing more on productivity im-provement than on low-skilled work.[6]

Increases in employment without increases in productiv-ity lead to a rise in the number of working poor, whichis why some experts are now promoting the creation ofquality and not quantity in labour market policies.[6]This approach does highlight how higher productivity hashelped reduce poverty in East Asia, but the negative im-pact is beginning to show.[6] In Vietnam, for example,employment growth has slowedwhile productivity growthhas continued.[6] Furthermore, productivity increases donot always lead to increased wages, as can be seen in theUnited States, where the gap between productivity andwages has been rising since the 1980s.[6] The ODI studyshowed that other sectors were just as important in re-ducing unemployment, as manufacturing.[6] The servicessector is most eective at translating productivity growthinto employment growth. Agriculture provides a safetynet for jobs and an economic buer when other sectorsare struggling.[6] This study suggests a more nuanced un-derstanding of economic growth and quality of life andpoverty alleviation.

3 Factors aecting economicgrowth

3.1 Political institutions, property rights,and rule of law

See also: Great Divergence Property rights, GreatDivergence Eciency of markets and state interven-tion and Great Divergence State prohibition of newtechnology

In economics and economic history, the transition tocapitalism from earlier economic systems was enabled bythe adoption of government policies that facilitated com-merce and gave individuals more personal and economicfreedom. These included new laws favorable to the estab-lishment of business, including contract law, the abolish-ment of anti-usury laws and laws providing for the pro-tection of private property.[7][8] When property rights areless certain, transaction costs can increase, hindering eco-nomic development. Enforcement of contractual rightsis necessary for economic development because it deter-mines the rate and direction of investments. When therule of law is absent or weak, the enforcement of prop-erty rights depends on threats of violence, which causesbias against new rms because they can not demonstratereliability to their customers.[9]

3.2 Productivity

Increases in labor productivity(ratio of value out-put to labor input) have historically been the mostimportant source of real per capita economicgrowth.[10][11][12][13][14] (Note: There are variousmeasures of productivity. The term used here appliesto a broad measure of productivity. By contrast, Totalfactor productivity (TFP) measures the change in outputnot attributable to capital and labor. Many of the citedreferences use TFP. Increases in productivity lower thereal cost of goods. Over the 20th century the real priceof many goods fell by over 90%.[15]

3.2.1 Historical sources of productivity growth

Main article: Productivity (economic history)

Economic growth has traditionally been attributedto the accumulation of human and physical capital,and increased productivity arising from technologicalinnovation.[16]

Before industrialization, technological progress resultedin an increase in population, which was kept in checkby food supply and other resources, which acted to limitper capita income, a condition known as the Malthusian

3.3 Capital 3

trap.[17][18] The rapid economic growth that occurred dur-ing the Industrial Revolution was remarkable because itwas in excess of population growth, providing an escapefrom theMalthusian trap.[19] Countries that industrializedeventually saw their population growth slow down, a phe-nomenon known as the demographic transition.Increases in productivity are the major factor responsi-ble for per capita economic growth this has been es-pecially evident since the mid-19th century. Most of theeconomic growth in the 20th century was due to reducedinputs of labor, materials, energy, and land per unit ofeconomic output (less input per widget). The balance ofgrowth has come from using more inputs overall becauseof the growth in output (more widgets or alternately morevalue added), including new kinds of goods and services(innovations).[20]

During the Industrial Revolution, mechanization beganto replace hand methods in manufacturing, and new pro-cesses streamlined production of chemicals, iron, steel,and other products.[21] Machine tools made the economi-cal production of metal parts possible, so that parts couldbe interchangeable.[22] See: Interchangeable parts.During the Second Industrial Revolution, a major fac-tor of productivity growth was the substitution of inan-imate power for human and animal labor. Also therewas a great increase power as steam powered electricitygeneration and internal combustion supplanted limitedwind and water power.[21] Since that replacement, thegreat expansion of total power was driven by contin-uous improvements in energy conversion eciency.[23]Other major historical sources of productivity wereautomation, transportation infrastructures (canals, rail-roads, and highways),[24][25] new materials (steel) andpower, which includes steam and internal combustionengines and electricity. Other productivity improve-ments included mechanized agriculture and scienticagriculture including chemical fertilizers and livestockand poultry management, and the Green Revolution.Interchangeable parts made with machine tools poweredby electric motors evolved into mass production, which isuniversally used today.[22]

Great sources of productivity improvement in the late19th century were railroads, steam ships, horse-pulledreapers and combine harvesters, and steam-poweredfactories.[26][27] The invention of processes for mak-ing cheap steel were important for many forms ofmechanization and transportation. By the late 19th cen-tury both prices and weekly work hours fell because lesslabor, materials, and energy were required to produceand transport goods. However, real wages rose, allow-ing workers to improve their diet, buy consumer goodsand aord better housing.[26]

Mass production of the 1920s created overproduction,which was arguably one of several causes of the GreatDepression of the 1930s.[28] Following the Great Depres-sion, economic growth resumed, aided in part by de-

Productivity lowered the cost of most items in terms of work timerequired to purchase. Real food prices fell due to improvementsin transportation and trade, mechanized agriculture, fertilizers,scientic farming and the Green Revolution.

mand for entirely new goods and services, such as tele-phones, radio, television, automobiles, and household ap-pliances, air conditioning, and commercial aviation (after1950), creating enough new demand to stabilize the workweek.[29] The building of highway infrastructures alsocontributed to post World War II growth, as did capitalinvestments in manufacturing and chemical industries.[30]The post World War II economy also beneted from thediscovery of vast amounts of oil around the world, par-ticularly in the Middle East. By John W. Kendricks esti-mate, three-quarters of increase in U.S. per capita GDPfrom 1889 to 1957 was due to increased productivity.[14]

Economic growth in in the United States slowed down af-ter 1973.[31] In contrast growth in Asia has been strongsince then, starting with Japan and spreading to Ko-rea, China, the Indian subcontinent and other parts ofAsia. In 1957 South Korea had a lower per capita GDPthan Ghana,[32] and by 2008 it was 17 times as high asGhanas.[33] The Japanese economic growth has slack-ened considerably since the late 1980s.Productivity in the United States grew at an increas-ing rate throughout the 19th century and was mostrapid in the early to middle decades of the 20thcentury.[34][35][36][37][38] US productivity growth spikedtowards the end of the century in 19962004, due toan acceleration in the rate of technological innovationknown as Moores law.[39][40][41][42] After 2004 U.S. pro-ductivity growth returned to the low levels of 1972-96.[39]

3.3 Capital

Capital in economics ordinarily refers to physical capi-tal, which consists of structures and equipment used inbusiness (machinery, factory equipment, computers andoce equipment, construction equipment, business ve-hicles, etc.).[3] Up to a point the amount of capital perworker is an important determinant of economic output.

4 3 FACTORS AFFECTING ECONOMIC GROWTH

Capital is subject to diminishing returns because of theamount that can be eectively invested and because ofthe growing burden of depreciation.In the development of economic theory the distributionof income was considered to be between labor and theowners of land and capital.[43]

3.4 New products and services

Another major cause of economic growth is the introduc-tion of new products and services and the improvement ofexisting products. New products create demand, which isnecessary to oset the decline in employment that occursthrough labor saving technology.[40][44]

3.5 Growth phases and sector shares

Economic growth in the U.S. and other developed coun-tries went through phases that aected growth throughchanges in the labor force participation rate and the rel-ative sizes of economic sectors. The transition from anagricultural economy to manufacturing increased the sizeof the high output per hour, high productivity growthmanufacturing sector while reducing the size of the loweroutput per hour, lower productivity growth agriculturalsector. Eventually high productivity growth in manufac-turing reduced the sector size as prices fell and employ-ment shrank relative to other sectors.[45][46] The serviceand government sectors, where output per hour and pro-ductivity growth is very low, saw increases in share of theeconomy and employment.[10]

3.5.1 Business cycle

For more details on this topic, see Business cycle.

Economists distinguish between short-run economicchanges in production and long-run economic growth.Short-run variation in economic growth is termed thebusiness cycle. The business cycle is made up of boomsand drops in production that occur over a period ofmonths or years. Generally, economists attribute theups and downs in the business cycle to uctuations inaggregate demand. In contrast, economic growth is con-cerned with the long-run trend in production due to struc-tural causes such as technological growth and factor ac-cumulation. The business cycle moves up and down, cre-ating uctuations around the long-run trend in economicgrowth.

3.6 Income equality

For more details on this topic, see Economic inequality.

A 1999 review in the Journal of Economic Literaturestates high inequality lowers growth, perhaps becauseit increases social and political instability.[47] A 1992World Bank report published in the Journal of Develop-ment Economics said that inequality is negatively, androbustly, correlated with growth. This result is not highlydependent upon assumptions about either the form ofthe growth regression or the measure of inequality.[48]NYU economist William Baumol found that substan-tial inequality does not stimulate growth because povertyreduces labor force productivity.[49] Economists DierkHerzer and Sebastian Vollmer found that increased in-come inequality reduces economic growth, but growth it-self increases income inequality.[50]

Berg and Ostry of the International Monetary Fund found that ofthe factors aecting the duration of growth spells (not the rate ofgrowth) in developed and developing countries, income equalityis more benecial than trade openness, sound political institu-tions, or foreign investment.[51][52]

According to International Monetary Fund economists,inequality in wealth and income is negatively correlatedwith the duration of economic growth spells (not the rateof growth).[51] High levels of inequality prevent not justeconomic prosperity, but also the quality of a countrysinstitutions and high levels of education.[53]

According to economists David Castells-Quintana andVicente Royuela, increasing inequality harms economicgrowth.[54] High and persistent unemployment, in whichinequality increases, has a negative eect on subsequentlong-run economic growth.[54] Unemployment can harmgrowth not only because it is a waste of resources, butalso because it generates redistributive pressures and sub-sequent distortions, drives people to poverty, constrainsliquidity limiting labor mobility, and erodes self-esteempromoting social dislocation, unrest and conict.[54] Poli-cies aiming at controlling unemployment and in partic-ular at reducing its inequality-associated eects supporteconomic growth.[54]

Economist Joseph Stiglitz presented evidence in 2009that both global inequality and inequality within coun-tries prevent growth by limiting aggregate demand.[55]Economist Branko Milanovic, wrote in 2001 that, Theview that income inequality harms growth or that im-proved equality can help sustain growth has becomemore widely held in recent years. ... The main reasonfor this shift is the increasing importance of human capi-

3.7 Demographic changes 5

tal in development. When physical capital mattered most,savings and investments were key. Then it was importantto have a large contingent of rich people who could savea greater proportion of their income than the poor and in-vest it in physical capital. But now that human capital isscarcer than machines, widespread education has becomethe secret to growth.[56]

In 1993, Galor and Zeira showed that inequality in thepresence of credit market imperfections has a long last-ing detrimental eect on human capital formation andeconomic development.[57] A 1996 study by Perotti ex-amined the channels through which inequality may aecteconomic growth. He showed that, in accordance withthe credit market imperfection approach, inequality is as-sociated with lower level of human capital formation (ed-ucation, experience, and apprenticeship) and higher levelof fertility, and thereby lower levels of growth. He foundthat inequality is associated with higher levels of redis-tributive taxation, which is associated with lower levelsof growth from reductions in private savings and invest-ment. Perotti concluded that, more equal societies havelower fertility rates and higher rates of investment in edu-cation. Both are reected in higher rates of growth. Also,very unequal societies tend to be politically and sociallyunstable, which is reected in lower rates of investmentand therefore growth.[58]

Research by Harvard economist Robert Barro, found thatthere is little overall relation between income inequal-ity and rates of growth and investment. According towork by Barro in 1999 and 2000, high levels of inequal-ity reduce growth in relatively poor countries but encour-age growth in richer countries.[59][60] A study of Swedishcounties between 1960 and 2000 found a positive im-pact of inequality on growth with lead times of ve yearsor less, but no correlation after ten years.[61] Studies oflarger data sets have found no correlations for any xedlead time,[62] and a negative impact on the duration ofgrowth.[51]

Some theories developed in the 1970s established possi-ble avenues through which inequality may have a positiveeect on economic development.[51][52] According to a1955 review, savings by the wealthy, if these increasewith inequality, were thought to oset reduced con-sumer demand.[63] A 2013 report on Nigeria suggests thatgrowth has risen with increased income inequality.[64]Some theories popular from the 1950s to 2011 incorrectlystated that inequality had a positive eect on economicdevelopment.[51][52] Analyses based on comparing yearlyequality gures to yearly growth rates were misleadingbecause it takes several years for eects to manifest aschanges to economic growth.[62] IMF economists founda strong association between lower levels of inequality indeveloping countries and sustained periods of economicgrowth. Developing countries with high inequality havesucceeded in initiating growth at high rates for a fewyears but longer growth spells are robustly associatedwith more equality in the income distribution.[52]

3.6.1 Equitable growth

Main article: Inclusive growth

While acknowledging the central role economic growthcan potentially play in human development, poverty re-duction and the achievement of the Millennium Devel-opment Goals, it is becoming widely understood amongstthe development community that special eorts mustbe made to ensure poorer sections of society are ableto participate in economic growth.[65][66][67] The eectof economic growth on poverty reduction - the growthelasticity of poverty - can depend on the existing levelof inequality.[68][69] For instance, with low inequality acountry with a growth rate of 2% per head and 40%of its population living in poverty, can halve poverty inten years, but a country with high inequality would takenearly 60 years to achieve the same reduction.[70][71] Inthe words of the Secretary General of the United NationsBan Ki-Moon: While economic growth is necessary, itis not sucient for progress on reducing poverty.[65]

3.7 Demographic changesDemographic factors may inuence growth by chang-ing the employment to population ratio and the laborforce participation rate.[10] Industrialization creates ademographic transition in which birth rates decline andthe average age of the population increases.Women with fewer children and better access market em-ployment tend to join the labor force in higher percent-ages. There is a reduced demand for child labor andchildren spend more years in school. The increase inthe percentage of women in the labor force in the U.S.contributed to economic growth, as did the entrance ofthe baby boomers into the work force.[10] See: Spendingwave

4 Negative eectsA number of arguments have been raised against eco-nomic growth.[72]

4.1 Resource depletionSee also: Energy returned on energy invested

Many earlier predictions of resource depletion, such asThomas Malthus' 1798 predictions about approachingfamines in Europe, The Population Bomb (1968),[73][74]and the SimonEhrlich wager (1980) [75] have not ma-terialized. Diminished production of most resources hasnot occurred so far, one reason being that advancementsin technology and science have allowed some previously

6 4 NEGATIVE EFFECTS

unavailable resources to be produced.[75] In some cases,substitution of more abundant materials, such as plasticsfor cast metals, lowered growth of usage for some metals.In the case of the limited resource of land, famine was re-lieved rstly by the revolution in transportation caused byrailroads and steam ships, and later by the Green Revolu-tion and chemical fertilizers, especially the Haber processfor ammonia synthesis.[76][77]

0

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M. King Hubbert's prediction of world petroleum productionrates. Virtually all economic sectors rely heavily on petroleum.

In the case of minerals, lower grades of mineral resourcesare being extracted, requiring higher inputs of capital andenergy for both extraction and processing.[78] An exampleis natural gas from shale and other low permeability rock,which can be developed with much higher inputs of en-ergy, capital, and materials than conventional gas in pre-vious decades. Another example is oshore oil and gas,which has exponentially increasing cost as water depthincreases.

4.2 Environmental impact

See also: The Limits to GrowthCritics such as the Club of Rome argue that a narrow

Forest in Indonesia being cut for palm oil plantation.

view of economic growth, combined with globalization,

is creating a scenario where we could see a systemic col-lapse of our planets natural resources.[79][80]

Concerns about possible negative eects of growth onthe environment and society led some to advocate lowerlevels of growth. This led to the ideas of uneconomicgrowth and de-growth and Green parties that argue thateconomies are part of a global society and global ecology,and cannot outstrip their natural growth without damag-ing those.Those more optimistic about the environmental impactsof growth believe that, though localized environmentaleects may occur, large-scale ecological eects are mi-nor. The argument, as stated by commentator Julian Lin-coln Simon, states that if these global-scale ecological ef-fects exist, human ingenuity will nd ways to adapt tothem.[81]

4.2.1 Implications of global warming

see Economics of global warming

Up to the present there are close correlations of economicgrowth with carbon dioxide emissions across nations, al-though there is also a considerable divergence in carbonintensity (carbon emissions per GDP).[82] Globally, TimGarrett observes that the emissions rate is directly relatedto the historical accumulation of economic wealth.[83]The Stern Review notes that the prediction that, Un-der business as usual, global emissions will be sucientto propel greenhouse gas concentrations to over 550ppmCO2 by 2050 and over 650700ppm by the end of thiscentury is robust to a wide range of changes in modelassumptions. The scientic consensus is that planetaryecosystem functioning without incurring dangerous risksrequires stabilization at 450550 ppm.[84]

As a consequence, growth-oriented environmentaleconomists propose massive government interventioninto switching sources of energy production, favouringwind, solar, hydroelectric, and nuclear. This wouldlargely conne use of fossil fuels to either domesticcooking needs (such as for kerosene burners) or wherecarbon capture and storage technology can be cost-eective and reliable.[85] The Stern Review, publishedby the United Kingdom Government in 2006, concludedthat an investment of 1% of GDP (later changed to2%) would be sucient to avoid the worst eects ofclimate change, and that failure to do so could riskclimate-related costs equal to 20% of GDP. Becausecarbon capture and storage is as yet widely unproven,and its long term eectiveness (such as in containingcarbon dioxide 'leaks) unknown, and because of currentcosts of alternative fuels, these policy responses largelyrest on faith of technological change.On the other hand, British conservative politician andjournalist Nigel Lawson claimed that people in a hundredyears time would be seven times as well o as we are to-

6.3 Endogenous growth theory 7

day, therefore it is not reasonable to impose sacrices onthe much poorer present generation.[86]

5 Physical constraints on growthSome physical scientists like Al Bartlett regard continu-ous economic growth as unsustainable.[87][88] Several fac-tors may constrain economic growth - for example: nite,peaked, or depleted resources.In 1972, the The Limits to Growth study modeled lim-itations to innite growth; originally ridiculed,[73][74][89]these models have been validated and updated.[90][91][92]

SomeMalthusians, such as William R. Catton, Jr., authorof the 1980 book Overshoot, express skepticism of theidea that various technological advancements will makepreviously inaccessible or lower-grade resources moreavailable. Such advances and increases in eciency, theysuggest, merely accelerate the drawing down of niteresources. Catton refers to the contemporary increasesin rates of resource extraction as, "...stealing ravenouslyfrom the future.[93]

6 Theories and models

6.1 Classical growth theoryIn classical (Ricardian) economics, the theory of produc-tion and the theory of growth are based on the theory orlaw of variable proportions, whereby increasing either ofthe factors of production (labor or capital), while holdingthe other constant and assuming no technological change,will increase output, but at a diminishing rate that even-tually will approach zero. These concepts have their ori-gins in Thomas Malthuss theorizing about agriculture.Malthuss examples included the number of seeds har-vested relative to the number of seeds planted (capital)on a plot of land and the size of the harvest from a plotof land versus the number of workers employed.[94] See:Diminishing returnsCriticisms of classical growth theory are that technology,the most important factor in economic growth, is heldconstant and that economies of scale are ignored.[95]

6.2 Solow-Swan modelRobert Solow[96] and Trevor Swan[97] developed whateventually became the main model used in growth eco-nomics in the 1950s. This model assumes that there arediminishing returns to capital and labor. Capital accumu-lates out of saving but its level per worker decreases dueto depreciation and population growth. As a result of di-minishing returns to capital economies eventually reacha point where, absent technological progress, capital per

workers remains constant and economic growth ceases.This point is called a steady state.The model also notes that countries can overcome thissteady state and continue growing by using new technol-ogy. In the long run, output per capita depends on therate of saving, but the rate of output growth is indepen-dent of the saving rate. The process by which countriescontinue growing despite the diminishing returns is ex-ogenous and represents the creation of new technologythat allows production with fewer resources. Technologyimproves, the steady state level of capital increases, andthe country invests and grows. One important predictionof the model, mostly borne out by the data, is that of con-ditional convergence ; the idea that poor countries willgrow faster and catch up with rich countries as long asthey have similar saving rates and technology.A major shortcoming of the approach is that it does notexplain the sources of technological change.

6.3 Endogenous growth theory

Main article: Endogenous growth theory

Growth theory advanced again with theories of economistPaul Romer and Robert Lucas, Jr. in the late 1980s andearly 1990s.Unsatised with the assumption of exogenous techno-logical progress in the Solow-Swan model, economistsworked to endogenize technology in the 1980s.They developed the endogenous growth theory thatincludes a mathematical explanation of technologicaladvancement.[98][99] This model also incorporated a newconcept of human capital, the skills and knowledge thatmake workers productive. Unlike physical capital, hu-man capital has increasing rates of return. Researchdone in this area has focused on what increases humancapital (e.g. education) or technological change (e.g.innovation).[100]

6.4 Unied growth theory

Unied growth theory was developed by Oded Galorand his co-authors to address the inability of endogenousgrowth theory to explain key empirical regularities in thegrowth processes of individual economies and the worldeconomy as a whole. Endogenous growth theory was sat-ised with accounting for empirical regularities in thegrowth process of developed economies over the last hun-dred years. As a consequence, it was not able to explainthe qualitatively dierent empirical regularities that char-acterized the growth process over longer time horizons inboth developed and less developed economies. Uniedgrowth theories are endogenous growth theories that areconsistent with the entire process of development, andin particular the transition from the epoch of Malthusian

8 6 THEORIES AND MODELS

stagnation that had characterized most of the process ofdevelopment to the contemporary era of sustained eco-nomic growth.[101]

6.5 The big pushOne popular theory in the 1940s was the Big Push, whichsuggested that countries needed to jump from one stage ofdevelopment to another through a virtuous cycle, in whichlarge investments in infrastructure and education cou-pled with private investments would move the economyto a more productive stage, breaking free from economicparadigms appropriate to a lower productivity stage.[102]The idea was revived and formulated rigorously, in thelate 1980s byKevinMurphy, Andrei Schleifer andRobertVishny.[103]

6.6 Schumpeterian growthSchumpeterian growth is an economic theory named af-ter the 20th-century Austrian economist Joseph Schum-peter. The approach explains growth as a consequenceof innovation and a process of creative destruction thatcaptures the dual nature of technological progress: interms of creation, entrepreneurs introduce new productsor processes in the hope that they will enjoy temporarymonopoly-like prots as they capture markets. In doingso, they make old technologies or products obsolete. Thiscan be seen as an annulment of previous technologies,which makes them obsolete, and "...destroys the rentsgenerated by previous innovations. (Aghion 855)[104] Amajor model that illustrates Schumpeterian growth is theAghion-Howitt model.[105]

6.7 Institutions and growthAccording to Acemolu, Simon Johnson and JamesRobinson, the positive correlation between high incomeand cold climate is a by-product of history. Europeansadopted very dierent colonization policies in dierentcolonies, with dierent associated institutions. In placeswhere these colonizers faced high mortality rates (e.g.,due to the presence of tropical diseases), they could notsettle permanently, and they were thus more likely to es-tablish extractive institutions, which persisted after inde-pendence; in places where they could settle permanently(e.g. those with temperate climates), they established in-stitutions with this objective in mind and modeled themafter those in their European homelands. In these 'neo-Europes better institutions in turn produced better de-velopment outcomes. Thus, although other economistsfocus on the identity or type of legal system of the col-onizers to explain institutions, these authors look at theenvironmental conditions in the colonies to explain insti-tutions. For instance, former colonies have inherited cor-rupt governments and geo-political boundaries (set by the

colonizers) that are not properly placed regarding the ge-ographical locations of dierent ethnic groups, creatinginternal disputes and conicts that hinder development.In another example, societies that emerged in colonieswithout solid native populations established better prop-erty rights and incentives for long-term investment thanthose where native populations were large.[106]

6.8 Human capital and growth

One ubiquitous element of both theoretical and empir-ical analyses of economic growth is the role of humancapital. The skills of the population enter into both neo-classical and endogenous growth models.[107] The mostcommonly used measure of human capital is the level ofschool attainment in a country, building upon the data de-velopment of Robert Barro and Jong-Wha Lee.[108] Thismeasure of human capital, however, requires the strongassumption that what is learned in a year of schooling isthe same across all countries. It also presumes that hu-man capital is only developed in formal schooling, con-trary to the extensive evidence that families, neighbor-hoods, peers, and health also contribute to the develop-ment of human capital. To measure human capital moreaccurately, Eric Hanushek and Dennis Kimko introducedmeasures of mathematics and science skills from interna-tional assessments into growth analysis.[109] They foundthat quality of human capital was very signicantly re-lated to economic growth. This approach has been ex-tended by a variety of authors, and the evidence indicatesthat economic growth is very closely related to the cogni-tive skills of the population.[110]

6.9 Energy consumption and eciencytheories

For more details on Energy eciency, see Productivityimproving technologies (historical) Energy eciency.

Energy economic theories emphasize the role of energyconsumption and energy eciency as important histori-cal causes of economic growth. Increases in energy ef-ciency were a portion of the increase in Total factorproductivity.[14] Some of the most technologically im-portant innovations in history involved increases in en-ergy eciency. These include the great improvementsin eciency of conversion of heat to work, the reuse ofheat, the reduction in friction and the transmission ofpower, especially through electrication.[111][112] Elec-tricity consumption and economic growth are stronglycorrelated.[113] Per capita electric consumption corre-lates almost perfectly with economic development.[114]

97 See also Degrowth Export-oriented industrialization Growth accounting List of countries by real GDP growth rate

8 References[1] Statistics on the Growth of the Global Gross Domestic

Product (GDP) from 2003 to 2013, IMF, October 2012.

[2] Bjork, Gordon J. (1999). The Way It Worked and Why ItWont: Structural Change and the Slowdown of U.S. Eco-nomic Growth. Westport, CT; London: Praeger. pp. 2,67. ISBN 0-275-96532-5.

[3] Bjork 1999, pp. 251

[4] Lawrence H. Ocer, What Was the U.K. GDPThen?" MeasuringWorth, 2011. URL:http://www.measuringworth.com/ukgdp/

[5] In Pursuit of Happiness Research. Is It Reliable? WhatDoes It Imply for Policy? The Cato institute. April 11,2007

[6] Claire Melamed, Renate Hartwig and Ursula Grant 2011.Jobs, growth and poverty: what do we know, what don'twe know, what should we know? London: Overseas De-velopment Institute

[7] Hunt, E. K.; Lautzenheiser, Mark (2014). History of Eco-nomic Thought: A Critical Perspective. PHI Learning.ISBN 978-0765625991.

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[61] Ruth-Aida Nahum (2 February 2005). Income Inequal-ity and Growth: a Panel Study of Swedish Counties 1960-2000.

11

[62] Banerjee, Abhijit V.; Duo, Esther (2003).Inequality And Growth: What Can The DataSay?". Journal of Economic Growth 8 (3): 26799.doi:10.1023/A:1026205114860. Retrieved September25, 2012.

[63] Kaldor, Nicoals, 1955, Alternative Theories of Distribu-tion, Review of Economic Studies, 23(2), 83100.

[64] Muhammad Dandume Yusuf (2 February 2013).Corruption, Inequality of Income and economic Growthin Nigeria.

[65] Claire Melamed, Kate Higgins and Andy Sumner (2010)Economic growth and the MDGs Overseas DevelopmentInstitute

[66] Anand, Rahul et al. (17 August 2013). Inclusive growthrevisited: Measurement and evolution. VoxEU.org (Cen-tre for Economic Policy Research). Retrieved 13 January2015.

[67] Anand, Rahul et al. (May 2013). Inclusive Growth:Measurement and Determinants (PDF). IMF WorkingPaper (WP/13/135). Asia Pacic Department: Interna-tional Monetary Fund. Retrieved 13 January 2015.

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[69] Bourguignon, Francois, Growth Elasticity of Poverty Re-duction: Explaining Heterogeneity across Countries andTime Periods in Inequality and Growth, Ch. 1.

[70] Ravallion, M. (2007) Inequality is bad for the poor in S.Jenkins and J.Micklewright, (eds.) Inequality and PovertyRe-examined, Oxford University Press, Oxford.

[71] Elena Ianchovichina and Susanna Lundstrom, 2009.Inclusive growth analytics: Framework and application,Policy Research Working Paper Series 4851, The WorldBank.

[72] Case, K.E., and Fair, R.C. 2006. Principles of Macroeco-nomics. Prentice Hall. ISBN 0-13-222645-6, ISBN 978-0-13-222645-5.

[73] Chapter 17: Growth and Productivity-The Long-RunPossibilities. Oswego.edu. 1999-06-10. Retrieved2010-12-22.

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[76] Wells, David A. (1891). Recent Economic Changes andTheir Eect on Production and Distribution of Wealth andWell-Being of Society. New York: D. Appleton and Co.ISBN 0-543-72474-3.Opening line of the Preface.

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[79] Donella H. Meadows, Jorgen Randers, Dennis L. Mead-ows. Limits to Growth: The 30-Year Update. WhiteRiver Junction, Vermont : Chelsea Green, 2004.

[80] Allan Schnaiberg. The Environment: From Surpus toScarcity. New York: Oxford University Press.

[81] The Ultimate Resource, Julian Simon, 1981

[82] Stern Review, Part III Stabilization. Table 7.1 p. 168

[83] Garrett, T. J. (2009). Are there basic physical constraintson future anthropogenic emissions of carbon dioxide?".Climatic Change 104 (34): 437. doi:10.1007/s10584-009-9717-9.

[84] Stern Review Economics of Climate Change. Part III Sta-bilization p.183

[85] Jaccard, M. 2005 Sustainable Fossil Fuels. CambridgeUniversity Press.

[86] Examination of Witnesses (Questions 3239)". 16 May2007. Retrieved 2007-11-29.

[87] Bartlett, Albert Allen (2013). Arithmetic, Popula-tion and Energy - a talk by Al Bartlett. albartlett.org.Retrieved 2014-07-22. You cannot sustain populationgrowth and / or growth in the rates of consumption of re-sources.

[88] Murphy, Tom (2011-07-12). Galactic-Scale Energy.Do the Math. Retrieved 2014-07-22. continued growthin energy use becomes physically impossible within con-ceivable timeframes ... all economic growth must simi-larly end.

[89]

[90] Turner, Graham. A Comparison of the Limits of Growthwith Thirty Years of Reality. CSIRO Working Paper Se-ries, (2010). Available at: http://www.csiro.au/files/files/plje.pdf

[91] Hall, C. & Day, J. Revisiting the Limits to Growth AfterPeak Oil American Scientist 2009; 97: 230-238.

[92] Meadows, D H; Randers (2004). Limits to Growth: The30-Year Update. Chelsea Green Publishing. ISBN 978-1-931498-58-6.

[93] Overshoot by William Catton, p. 3 [1980]

[94] Bjork 1999, pp. 297,8

[95] Bjork 1999, pp. 298

[96] Robert M. Solow (1956), A Contribution to the Theoryof Economic Growth, Quarterly Journal of Economics,70(1), p p. 6594.

[97] Swan, Trevor W. (1956). Economic Growth and Cap-ital Accumulation'". Economic Record 32: 33461.doi:10.1111/j.1475-4932.1956.tb00434.x.

12 9 FURTHER READING

[98] D. Romer, 1986

[99] Lucas, 1988

[100] Elhanah Helpman, The Mystery of Economic Growth,Harvard University Press, 2004.

[101] Galor O., 2005, From Stagnation to Growth: UniedGrowth Theory. Handbook of Economic Growth, Else-vier

[102] Paul Rosenstein-Rodan

[103]

[104] Quote from Philippe Aghion, 2002, SchumpeterianGrowth Theory and the Dynamics of Income Inequality,Econometrica, 70(3), 855882. Also see Wendy Carlin and David Soskice, 2006,Macroeconomics: Imperfections, Institutions & Policies,specically chapter 14.

[105] Philippe Aghion and Peter Howitt, 1992, A Modelof Growth Through Creative Destruction, Econometrica,60(2), 323351. Philippe Aghion, 2002, Schumpeterian Growth Theoryand the Dynamics of Income Inequality, Econometrica,70(3), 855882.

[106] Daron Acemolu, Simon Johnson and James A.Robinson.The Colonial Origins of Comparative Develop-ment: An Empirical Investigation. American EconomicReview 91(5): 1369401. 2001.

[107] Mankiw, N. Gregory, David Romer, and David Weil.1992. A contribution to the empirics of economicgrowth. Quarterly Journal of Economics 107, no. 2(May): 407437 Sala-i-Martin, Xavier, Gernot Doppelhofer, and RonaldI. Miller. 2004. Determinants of long-term growth: ABayesian Averaging of Classical Estimates (BACE) ap-proach. American Economic Review 94, no. 4 (Septem-ber): 813835. LudRomer, Paul. 1990. Human capital and growth:Theory and evidence. Carnegie-Rochester ConferenceSeries on Public Policy 32: 251286.

[108] Barro, Robert J., and Jong-Wha Lee. 2001. Interna-tional data on educational attainment: Updates and impli-cations. Oxford Economic Papers 53, no. 3 (July): 541563.

[109] Hanushek, Eric A., and Dennis D. Kimko. 2000.Schooling, labor force quality, and the growth of na-tions. American Economic Review 90, no. 5 (December):11841208

[110] Hanushek, Eric A., and Ludger Woessmann. 2008.The role of cognitive skills in economic development.Journal of Economic Literature 46, no. 3 (September):607668 . Hanushek, Eric A., and Ludger Woessmann. 2011.How much do educational outcomes matter in OECDcountries?" Economic Policy, 26, no. 67: 427491.

[111] Landes, David. S. (1969). The Unbound Prometheus:Technological Change and Industrial Development inWestern Europe from 1750 to the Present. Cambridge,New York: Press Syndicate of the University of Cam-bridge. pp. 289, 293. ISBN 0-521-09418-6.

[112] Devine, Jr., Warren D. (1983). From Shafts to Wires:Historical Perspective on Electrication, Journal of Eco-nomic History, Vol. 43, Issue 2 (PDF). p. 355.

[113] Committee on Electricity in Economic Growth En-ergy Engineering Board Commission on Engineering andTechnical Systems National Research Council (1986).Electricity in Economic Growth. Washington, DC: Na-tional Academy Press. pp. 16, 40. ISBN 0-309-03677-1

[114] Paepke, C. Owen (1992). The Evolution of Progress: TheEnd of Economic Growth and the Beginning of HumanTransformation. New York, Toronto: Random House. p.109. ISBN 0-679-41582-3.

9 Further reading Argyrous, G., Forstater, M and Mongiovi, G. (eds.)(2004) Growth, Distribution, And Eective Demand:Essays in Honor of Edward J. Nell. NewYork: M.E.Sharpe.

Barro, Robert J. (1997) Determinants of EconomicGrowth: A Cross-Country Empirical Study. MITPress: Cambridge, MA.

Galor, O. (2005) From Stagnation to Growth: Uni-ed Growth Theory. Handbook of EconomicGrowth, Elsevier.

Grier, Kevin (2008). Empirics of Economic Growth.The Concise Encyclopedia of Economics (2nd ed.).Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267.

Halevi, Joseph; Laibman, David and Nell, EdwardJ. (eds.) (1992) Beyond the Steady State: Essays inthe Revival of Growth Theory, edited with, London,UK:

Hueting, Roe (2011) The future of the Environ-mentally sustainable national income. kologischesWirtschaften, 4/2011, 30-35

Jones, Charles I. (2002) Introduction to EconomicGrowth 2nd ed. W. W. Norton & Company: NewYork, N.Y.

Kirzner, Israel. (1973) Competition and En-trepreneurship

Lucas, Robert E., Jr. (2003) The Industrial Revo-lution: Past and Future, Federal Reserve Bank ofMinneapolis, Annual Report online edition

10.2 Data 13

Mises, Ludwig E. (1949) Human Action 1998reprint by the Mises Institute

Paepke, C. Owen. The Evolution of Progress: TheEnd of Economic Growth and the Beginning of Hu-man Transformation. New York, Toronto: RandomHouse. ISBN 0-679-41582-3.

Puthenkalam, John Joseph, Integrating Freedom,Democracy and Human Rights into Theories ofEconomic Growth, Manila, 1998.

Romer, Paul M. (2008). Economic Growth. TheConcise Encyclopedia of Economics (2nd ed.).Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267.

Schumpeter, Jospeph A. (1912) The Theory of Eco-nomic Development 1982 reprint, Transaction Pub-lishers

VladimirN. Pokrovskii (2011)Econodynamics. TheTheory of Social Production, Springer, Berlin.

Weil, David N. (2008) Economic Growth 2nd ed.Addison Wesley.

10 External links

10.1 Articles and lectures Economic growth. Encyclopdia Britannic.2007. Encyclopdia Britannica Online. 17November 2007.

Beyond Classical and Keynesian MacroeconomicPolicy. Paul Romer's plain-English explanation ofendogenous growth theory.

Does Economic Growth increase Living Standards? CEPR Economics Seminar Series Two seminars onthe importance of growth with economists DeanBaker and Mark Weisbrot

On global economic history by Jan Luiten van Zan-den. Explores the idea of the inevitability of the In-dustrial Revolution.

The Economist Has No Clothes essay by RobertNadeau in Scientic American on the basic assump-tions behind current economic theory

World Growth Institute. An organization dedicatedto helping the developing world realize its full po-tential via economic growth.

Economics for Everyone- Evaluating EconomicGrowth

Understanding the world today Multiple reports oneconomic growth

Research and Degrowth network Academic associ-ation dedicated to research, awareness raising, andevents organization around the topic of degrowth.

10.2 Data Angus Maddisons Historical Dataseries Series foralmost all countries on GDP, Population and GDPper capita from the year 0 up to 2003

OECD Economic growth statistics multinational data sets easy to use data set showinggdp, per capita and population, by country and re-gion, 1970 to 2008. Updated regularly.

14 11 TEXT AND IMAGE SOURCES, CONTRIBUTORS, AND LICENSES

11 Text and image sources, contributors, and licenses11.1 Text

Economic growth Source: http://en.wikipedia.org/wiki/Economic_growth?oldid=665667560 Contributors: Mav, Tarquin, Youssefsan,Enchanter, SimonP, Quasar~enwiki, Edward, Michael Hardy, Modster, Kku, Gabbe, Extro, Notheruser, Kingturtle, Mydogategodshat,Charles Matthews, Viz, Dysprosia, Wik, Tpbradbury, Philopp, Fvw, Pakaran, Phil Boswell, Robbot, Korath, Geordieandy, Meelar, Spell-Bott, Alan Liefting, David Gerard, Stirling Newberry, Nikodemos, Everyking, Andris, Guanaco, Khalid hassani, Jackol, Bobblewik,Wmahan, Andycjp, Jdevine, Beland, Phil Sandifer, The Land, Gsociology, Sam Hocevar, Klemen Kocjancic, Discospinster, Mani1,Stereotek, Bender235, Jensbn, Mwanner, RoyBoy, Cretog8, Per Olofsson, BrokenSegue, Giraedata, Jerryseinfeld, Nk, Rajah, AppleJug-gler, Alansohn, Andy L, John Quiggin, Martinship, DreamGuy, Sciurin, Guo, Dennis Bratland, Ultramarine, Oleg Alexandrov, Bobrayner,Woohookitty, Bluemoose, DL5MDA, Driftwoodzebulin, Sapin~enwiki, ArchCarrier~enwiki, Rjwilmsi, Bob A, Yamamoto Ichiro, Naraht,RobertG, Old Moonraker, LAk loho, RexNL, DaGizza, Volunteer Marek, Bgwhite, Clinton Boys, Wjfox2005, Shaggyjacobs, Yurik-Bot, Wavelength, RobotE, Hairy Dude, RussBot, Polluxian, Gaius Cornelius, Morphh, Afelton, NawlinWiki, Fabhcn, Grafen, Voyevoda,Mhartl, Thiseye, Daniel Mietchen, Odddmonster, Lajiri, PhilipO, Farmanesh, Obey, Aaron Schulz, M3taphysical, Fenrith, CLW, Lapafrax,Maunus, Leptictidium, Closedmouth, Arthur Rubin, Spliy, Martinku, AndrewWTaylor, Erik Sandberg, SmackBot, YellowMonkey, Ram-neek, Alex1011, Lawrencekhoo, Jagged 85, Gunnar.Kaestle, Yamaguchi, Gilliam, Hmains, GwydionM, Chris the speller, Bluebot, Delink, Dlohcierekims sock, DHN-bot~enwiki, Chendy, Can't sleep, clown will eat me, Brimba, Lazar Taxon, Makemi, Nakon, John D. Croft,Dacoutts, RandomP, Skinnyweed, Clicketyclack, Ozhiker, Lapaz, Copeland.James.H, Luisinui, JHunterJ, Smith609, Makyen, SQGibbon,San Saba, SandyGeorgia, AdultSwim, J Brassy, Nikka-EN, Paul Nollen, Phuzion, Keith-264, Levineps, Iridescent, Tamino, Joseph Solis inAustralia, JoeBot, JHP, RekishiEJ, HongQiGong, Madla~enwiki, Elharo, Colignatus, Trevor.tombe, CRGreathouse, Sven945, Van helsing,Aherunar, Vision Thing, DSachan, Dgw, Thomasmeeks, Pfhenshaw, Requestion, Goatchurch, Kraky, Piccolo Modicatore Laborioso,Richhoncho, Thijs!bot, Epbr123, Cimbalom, Doc richard, Nalvage, Marek69, Jackftwist, AntiVandalBot, Gregalton, Fayenatic london,Shein, Alphachimpbot, Mrs smartygirl, AniRaptor2001, Barek, MER-C, Sheitan, Mgbjimmy, RainbowCrane, PhilKnight, Bongwarrior,VoABot II, Sarahj2107, Brusegadi, Catgut, Awinkle, JaGa, LonghornJohnny, Pikitfense, Gun PowderMa, Barak1, STBot, Marenco, Earth-denizen, Fconaway, J.delanoy, Rfalcon27, Rlsheehan, LChimienti, Mattnad, Ricky setiawan~enwiki, NagamasaAzai, Clerks, Andyohio,Aformalevent, Colchicum, Collinpark, Cometstyles, Brahmastra, Scott Illini, Wikipeterproject, DASonnenfeld, Idioma-bot, Funandtrvl,28bytes, VolkovBot, Marekzp, Wmcg, Countermereology, Larklight, Lamro, Phmoreno, SchumiChamp, Farcaster, MaCRoEco, Gira-soleDE, StAnselm, Springbreak04, Financeeditor, Malcolmxl5, Flyer22, Emilfarb, Xahm2307, Martinangel, Keynes13, Fuller.brandon,OKBot, Belligero, Msrasnw, Capitalismojo, Rinconsoleao, Educationeciency, Mr. Granger, ClueBot, LAX, Mild Bill Hiccup, Tkeu,Alexhopkins, Niceguyedc, Studentteacher1, Dwrcan, Sun Creator, AZatBot~enwiki, Redthoreau, SchreiberBike, Whaleiouse, Nem1yan,Aprock, Thingg, Versus22, Johnuniq, SF007, Attaboy, Ramisses, Nathan Johnson, Jytdog, Zencv, WikHead, Lookatim, Kelseywslee, Ad-dbot, Yakiv Gluck, Some jerk on the Internet, Yoenit, Oericgo, DougsTech, Nathan zuckerman, Asfreeas, MrOllie, Download, LaaknorBot,Casperdc, Favonian, West.andrew.g, Tassedethe, HansIsaksson, Lightbot, Teles, Ettrig, Legobot, Luckas-bot, Yobot, JohnnyCalifornia,Acromaniac, Gongshow, Marshall Williams2, AnomieBOT, NathanoNL, Jim1138, Vextration, OpenFuture, Dave94703, Elostirion, Ma-terialscientist, Markofmathias, ArthurBot, LilHelpa, Xqbot, S h i v a (Visnu), Cureden, Capricorn42, Tomdo08, J JMesserly, Srich32977,Fotisaros, Econo67a, Alexandru Stanoi, Ignoranteconomist, Smallman12q, Shadowjams, Mcstubble, FrescoBot, Tobby72, Afab, Ongsaluri, Rd232 public, Atlantia, Citation bot 1, Shoxie, Economics Research, A8UDI, Madliner, Jandalhandler, Hunarian, LilyKitty, Rbyteis-bst, Schmelzerm, Fernanr, Minimac, DARTH SIDIOUS 2, OopsTardyAgain, RjwilmsiBot, HanAre, Cdjwells, Mconover14, Elium2,EmausBot, John of Reading, Orphan Wiki, Dewritech, GoingBatty, Lbagman, Active Banana, RememberingLife, Unsyncategoremata,Cogiati, Traxs7, Mar4d, Abletu, Gsarwa, Donner60, Stikemanforum, 12igon6, Financestudent, Fritz.grobbelaar, Grampion76, Foxxy-grandpa, DASHBotAV, Danielfc.mx, Islamrezk2013, Locomotive999, ClueBot NG, Cwmhiraeth, Somedierentstu, Satellizer, Snotbot,Frietjes, Widr, CasualVisitor, Helpful Pixie Bot, Gloriadai, Strike Eagle, BG19bot, Google Guruprasad, Iselilja, Karim errouaki, MarkArsten, H0339637, Citingsources, CitationCleanerBot, Rrronny, Polmandc, Matador78, PietervanderZouwen, Achowat, Stephen wilhelm,EcoChap, CeraBot, BattyBot, Pratyya Ghosh, The Illusive Man, John M. DiNucci, Panga, Sae Harshberger, Chow, Hmainsbot1, Mo-gism, Wikignome1213, Viewmont Viking, Dechrwr, SFK2, Mathematician314, Cupco, Chris97531, Gsurgey, Reatlas, Neo Poz, EllenCT,Globalizr, StapelChips, Hugo LM, Inaaaa, MrScorch6200, BigZ12, Jonasbarka, Estaling, JaconaFrere, Monkbot, Wallaby65, Red WI,Lukeyhano, Trackteur, Research83, Etherington1993, Sy9045, Apenuta, Jodielavery, Jbitz743, KasparBot, Th3ASh0rtninja, Asimova andAnonymous: 538

11.2 Images File:Berg_Ostry_2011_Chart_4.gif Source: http://upload.wikimedia.org/wikipedia/commons/4/41/Berg_Ostry_2011_Chart_4.gif Li-

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Measuring economic growthImportance of long-run growthQuality of life

Factors affecting economic growthPolitical institutions, property rights, and rule of lawProductivityHistorical sources of productivity growth

CapitalNew products and servicesGrowth phases and sector sharesBusiness cycle

Income equalityEquitable growth

Demographic changes

Negative effectsResource depletionEnvironmental impactImplications of global warming

Physical constraints on growthTheories and models Classical growth theorySolow-Swan modelEndogenous growth theoryUnified growth theoryThe big pushSchumpeterian growthInstitutions and growthHuman capital and growthEnergy consumption and efficiency theories

See alsoReferencesFurther readingExternal linksArticles and lecturesData

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